Rogers Communications (Rogers Communications News, Stock Quote, Chart TSX:RCI.B) just got a target and ratings raise from Echelon Wealth Partners’ Rob Goff, who says he sees modest upside to his forecasts for 2019 and 2020 based on the company’s performance.
In an update to clients on Wednesday, Goff took his rating from “Hold” to “Buy” while increasing his target price from $76.00 to $79.00, representing a 12-month return of 15.8 per cent at the time of publication.
Rogers announced its second quarter ended June 30, 2019, financials on Tuesday, showing revenue and adjusted EBITDA increases of 0.6 per cent and 8.7 per cent, respectively.
“We delivered strong growth across all the key value drivers of our business, while making the right long-term investments and significantly advancing our strategic plan,” said Joe Natale, President and CEO, in a press release. “Our robust fundamental performance enabled us to take an important step forward to introduce unlimited data plans with no overage fees for Canadians. This is another important initiative, led by Rogers, in putting our customers first.”
Goff calls the quarter’s financials and subscriber numbers largely in line with estimates, with Rogers reporting Q2 revenue and EBITDA of $3.789 billion and $1.635 billion, respectively, versus his estimates of $3.831 billion and $1.584 billion, respectively, and the consensus call for $3.879 billion and $1.630 billion, respectively.
The analyst says he is encouraged by commentary about the initial traction of the Infinite Wireless packages together with the option of three-year handset financing.
“Wireless momentum has improved about the Infinite plans with 3-year device financing plan stimulating demand while backed by positive economics including lower handset subsidies where Rogers spends ~$2 billion annually. Wired broadband is solid with better margins,” writes Goff.
“We see modest upside to our forecasts and in turn consensus forecasts for 2019 and 2020. Our prior price target was just above the consensus $75.00 where the highest price target was at $87.00 and second at $83.00 with 5/7/2 Buy/Hold/Sell Ratings,” he said.
Goff says that he is comfortable moving up his target to $79.00, saying that Rogers’ valuation compares well with its telco peers, BCE, Shaw and Telus.